The Bangladesh Securities and Exchange Commission has approved only three initial public offerings since the start of 2024.
Of the three companies, Craftsman Footwear and Accessories Limited and Web Coats PLC were listed on the small and medium entrepreneurs鈥� platform of the Dhaka Stock Exchange and the remaining one, Techno Drugs Limited, was listed on the main platform of the bourse after issuing their respective IPOs.
Market operators said the country鈥檚 stock market was struggling to attract well-performing companies due to complicated rules, extra compliance requirements and other hassles.
A lengthy process, easy access to bank loans, and oversight from multiple regulatory bodies have made it less appealing for companies to join the stock market, they said.
Regulatory bodies have delayed efforts to understand and fix these issues, making it hard for investors to find top companies to invest in, they said.
A total of four companies issued IPO in 2023 while the number was nine in the previous year.
Mohammad Obaydur Rahman, vice-president of the Bangladesh Merchant Bankers Association, said that there was a perception among investors that not bringing IPO鈥檚 in the market would be good when the market was facing a crisis.
鈥楾he stock market regulator gets pressurised from the investors and takes decisions based on it. The BSEC recently rejected six or seven applications,鈥� he said.
The Dhaka Stock Exchange has been in a bearish vibe since the start of the year.
DSEX, the key index of the DSE, lost 1,043.47 points since January 1 till date.
Merchant bankers submitted to the DSE proposals, including significant changes to public issue rules and relevant notifications to attract quality IPOs to the capital market in June.
Obaydur added that not just the investors, the regulator also had negative assumptions about new applications fearing that the new companies might conduct fraudulence activities to get listed.
鈥業t is true that some companies committed fraudulent activities to enter the market, but no exemplary punishment was imposed upon those companies. If the regulators took such actions, such activities would decrease,鈥� he said.
The process of listing is a long one, Obaydur said.
Faysal Ahmad Khan, associate professor (current charge) of the Bangladesh Institute of Capital Market, said that the culture of raising capital from the stock market was not established in the country.
鈥楾here is no integration among the regulators. For example, in the developed countries, if banks finance a company for long term, it issues a bond. But we do not have such integration. How would our market develop?鈥� he said.
鈥業f the regulators set similar governance rules for listed and non-listed companies, the companies would willingly try to enter the market,鈥� Faysal said.
鈥楾o encourage companies into being listed on the stock market, the regulators would have to fix their policy framework and establish integration among the regulators,鈥� he added.
Rezaul Karim, spokesperson and executive director of the BSEC, said that the commission was trying to encourage companies with good fundamentals to go public and took several initiatives for it.
